Google buys a chunk of Iowa’s wind power

The search giant has committed to a 20 year agreement to take over 100MW of …

Google has attempted to influence the US' energy future through the promotion of renewable energy sources. So far, most of that effort has come in the form of investments by its Google.org charitable arm, which includes a group dedicated to promoting technologies it views as promising, and lowering the price of renewable power. The company itself has been attempting to operate on a carbon-neutral basis since 2007. In a major step towards both of these goals, the company has now announced that it has signed a 20 year contract to take on 114MW of power produced by a wind farm in Iowa.

Although Google has some on-site solar, it's often difficult to guarantee renewable power supplies in many areas that it has facilities. Google has chosen to compensate by buying carbon offsets, but many other companies rely on what are termed Renewable Energy Certificates; these also turn out to be the key to its use of wind power from Iowa, which it can't otherwise use to power any of its own facilities.

An REC is created when renewable power is generated, but sold onto the grid as regular electricity. Its renewableness has a tangible value to those who are interested in purchasing renewable power, and the REC lets a company capture that value by selling a certificate that someone else purchases in order to offset the use of power from nonrenewable sources.

For the wind farm output, Google will rely on the fact that it is now (in addition to many other things) an electric utility. Its subsidiary will take the wind farm power and sell it on the spot market, which would effectively generate RECs. Instead of selling those on to a third party, however, Google will simply retire them (although they are likely to count them towards its carbon neutrality efforts). The company terms the 114MW "enough to supply several data centers."

For Google, the long-term nature of the deal insulates it from spikes in energy prices. That's a major incentive for a company that earns its money primarily through power-hungry data centers. But the company also views the contract as sending important signals to the electricity market. The company that built the wind farm will have a guaranteed revenue stream that will enable it to continue investing in infrastructure, while taking over 100MW off the market may induce others to replace the lost capacity. Finally, it may cause other companies that are looking to enhance their renewable energy portfolios to consider crafting similar deals.